OPEC to cut cost of overproduction by 50% - Timipre Sylva

The Honourable Minister of State, Petroleum Resources, Chief Timipre Sylva, on the 21st of September said that there will be no Organisation of Petroleum Exporting Countries (OPEC) cut off oil production by 50 per cent as previously reported rather, there will be a cut for overproduction of the 57,000 barrels per day.

Sylva said: “We didn’t say there was going to be OPEC cut by 50 per cent, that means we will not survive at all. What came out and it was actually misrepresented in the press was that we are cutting 50 per cent of our overproduction, so it was not our products that is going down by 50 per cent. Cost-cutting is something we’ve been discussing because the government must have more profit from oil activities and the bottom line is affected very much by the cost of the business. So we are definitely looking at cost reduction issues.”

This statement was made at a press briefing on the 21st of September after the 2 days ministerial retreat held at the Legends Hotel, Airport road with Directors and Executives of the ministry of petroleum which include Dr Yau Usman Idris, Mr Ahmad Rafau Shakur, Dr Bello Aliyu Gasau, Mallam Mele Kolo Kyari, Dr Folashade Yemi-Esan and many others.

The retreat concluded with the production of strategic priorities that focus on Increase in oil and gas reserve and production, Energy security through curtailment of smuggling and revamping refineries, Increase in Federation Revenue through cost control and increased efficiencies and finally, facilitate investment in capital projects, thereby enhancing job creation opportunities and poverty eradication.

In addition to the statement of Chief Timipre Sylva, NNPC GMD Mele Kyari stated that OPEC is more concerned with the market balancing and for the market to be balanced, there has to be a control of oil production.

Kyari said: “Everybody believes that the cost of production is high in terms of averages, global averages, we’re somewhere in the middle, and our plan is to pull it down and the way to pull it down is very simple; clear planning, uproar planning, then very excellent procurement process and of course getting the right technologies and ultimately having all stakeholders align and if you do a combination of this at the planning stage, and you deliver on it, I’m very sure that cost will come down.

“The current situation with OPEC is about market balancing and market balancing is that everybody contributes so that at the end of the day, the benefit comes to all and then the entire global market is stabilized. So that’s the first priority of OPEC, it’s not about the production itself, it’s about balancing the market and you can’t do that without controlling production which is what is happening.

“And as a country, we have very ingrained interest tp make sure that we participate in this activity because you can have very high production and very low prices for it and that’s not what you want. So for us, the cost we’re talking about is our own conformity levels of today. To come down to the conformity later, we have to voluntarily agree to deliver and that will have no impact on our plan,” Kyari said.

Speaking further on achieving the objective of revamping refineries, Mele Kyari stated that the three major refineries in Nigeria will be rehabilitated before the end of this tenure through comprehensive rehabilitation to ensure all the inland depot are more functional.

“We have promised Mr president that we are going to deliver all the three refineries before the end of his tenure and we are very clear on our schedules particularly with Port Harcourt. I just came back from Port Harcourt and what we did is to complete having the full scoping of the work so that we can have a clear contract before the end of this year and then commence full-scale rehabilitation by January. what that means is that when we start that, we know we can deliver it by the end of 2022.

“What that will do is that we will bring over ten million litres of gasoline only from Port Harcourt refinery alone. And that will cost us a significant proportion of the nation’s demand. We’re making sure all our inland depots come to life through rehabilitation of the pipelines and the depot themselves. Yes, we have challenges, a number of issues around vandals who do interfere with the activities of our pipeline and we are also facing that.”

Speaking on the implication of these steps already taken, Mele Kyari said: “What this is going to do is that it is going to take away pressure mostly from mostly our Ibadan depot and therefore, the proximate state to Kwara state will start taking their deliveries from Ilorin depot and it means that there is going to be specific reduction of traffic situation specifically from Apapa area where some of these products normally come from.

“As we speak, the Ilorin depot commissioned today after five years of absence. There have been no lodging in the Ilorin depot in the last five years until today and right now we have 10 million litres of gasoline in place in the Ilorin depot and this is part of our comprehensive rehabilitation process to make sure that all our inland depots come to life through rehabilitations of the pipelines and the depots themselves.”

Source: Vanguard